Anti-secret settlement bill advances to Assembly floor

May 7, 2017

The Assembly Privacy and Consumer Protection Committee expressed reservations about a bill that would curb secret settlements in certain civil matters on Tuesday, but allowed the measure to continue to the floor with promises to address some of the opposition’s concerns.

AB 889, by Assemblymember Mark Stone (D-Scotts Valley), would prevent secret settlements when the public interest in knowing about “public dangers” outweighs any individual or business interest in keeping information about that danger confidential.

Last year, Stone championed a bill that would prevent secret settlements in some sexual assault cases. This year, his approach goes after settlement agreements related to dangerous products and environmental hazards. The bill would make confidentiality agreements in these cases unenforceable, and would allow any person, including a news organization, to challenge a stipulated protective order to access discovery documents exchanged in these cases that reveal facts about the danger.

The purpose of AB 889 is to help the public identify these dangers more quickly, prevent litigants from being muzzled about harms from these dangers, and allow the public and the news media to lawfully access this information from the courts. CNPA testified in support of AB 889, specifically addressing aspects of court access, pointing out that, despite opponents’ fears, courts are well-versed in applying a balancing test to determine the disclosablility of records.

The first attempt at this measure was precipitated by defects in Firestone/Bridgestone tires, which resulted in the deaths of more than 150 people before the tires were recalled in 2000. More than 200 cases were secretly settled in the decade prior to the recall. Other products have exposed the public to ongoing dangers, including the use of items like defective medical scopes and the failure of car seat backs, which caused numerous deaths before the danger was revealed.

AB 889 essentially removes secrecy as a leverage point in product liability litigation, for both parties. Opponents of the bill argued that permitting any person to access discovery documents exchanged in a relevant case would chill the discovery process generally and force companies to enter into settlements at earlier stages of litigation to avoid disclosing information they would not be able to keep secret. But the plaintiff’s bar supports the measure, with one lawyer bemoaning the fact that he’s been gagged from warning the public of dangers that injure his clients.

The bill was voted out of the Privacy Committee on a 6-3 vote, with one member not voting. The bill is eligible to be voted on by the entire Assembly as early as next week. Due to concerns raised by the opposition and acknowledged by the author, the bill may need to be amended to avoid unintended consequences and have a better chance of advancing in the face of fierce opposition.